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TCS: Stable performance

Jan 14, 2013

Tata Consultancy Services (TCS) has announced its third quarter results for financial year 2012-2013 (3QFY13). The company reported a 2.9% quarter-on-quarter (QoQ) growth in its consolidated sales and a 1.1% QoQ increase in its consolidated net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 2.9% QoQ in 3QFY13.
  • Operating margins expanded marginally by 0.6% QoQ to 27.3% during the quarter as compared to 26.8% seen during the previous quarter (2QFY13) although there was higher employee benefit expense, which increased by 3.2% QoQ.
  • Net profits grew by 1.1% QoQ on an absolute basis and the net profit margin dropped to 22.1% from 22.5% witnessed in the last quarter. The fall in net profits was because of lower other income during the quarter as well as a higher effective tax rate, which was 21.9% in 3QFY13 compared to 21% in 2QFY13.
  • TCS added a net of 9,561 employees during the quarter. The total headcount of the company was 263,637 at the end of 3QFY13.
  • Attrition rate continued to drop and stood below 10% in IT services segment. Overall attrition including BPO stood at 11.2%.
  • The number of US$ 100 million clients increased from 14 to 16.
Consolidated financial snapshot

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